The ECB’s latest projections foresee an average inflation rate of 1.3% this year, before accelerating to 1.5 percent in 2018. Eurozone inflation accelerated to the fastest pace since January 2013, providing fresh arguments to those calling for an exit from the European Central Bank’s monetary stimulus programme. Rising oil prices have been pushing up inflation across the eurozone, including in Germany, its largest economy, Spain and Italy. “The focus remains on core inflation, which isn’t looking great,” said Frederik Ducrozet, senior economist at Banque Pictet and Cie in Geneva. Meanwhile, the eurozone’s core inflation, which strips out volatile elements such as energy, was unchanged for the third consecutive month in February at 0.9%.

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Eurozone inflation has risen above the European Central Bank’s (ECB) target rate for the first time in four years. Although inflation is now above its target rate, February’s core inflation rate – which strips out the impact of energy and food prices – was unchanged at 0.9%. Inflation in the 19-nation bloc hit 2% in February, according to Eurostat, up from a rate of 1.8% the month before. The rate is the highest since January 2013 and is slightly above the ECB’s target of just below 2%. Separate figures from Eurostat found that the unemployment rate in the eurozone remained unchanged at 9.6% in January, which is the lowest rate since May 2009.

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Preview of European Central Bank’s meeting on Thursday March 9

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For the last several years, President Draghi has struck a largely dovish tone in speeches and press conferences. The ECB is all but certain to leave current monetary policy in place and maintain a promise for lengthy stimulus. The bank’s extended but lowered programme of bond buying is set to kick off next month. So while rates and the extent of QE are unlikely to change, what could shift is the bank’s stance. In this context and taking into account looming political risks, the ECB has no reason to change its monetary policy now and will at best review its macroeconomic forecasts.”